RIYADH, 25 December — Minister of Finance and National Economy Ibrahim Al-Assaf has said that the current economic turmoil in Argentina will not affect Saudi Arabia’s economic interests as no Saudi banks have outstanding credits against Argentine agencies and direct Saudi investment in the country is in any case almost exclusively limited to fixed assets.

Al-Assaf made the remarks while addressing a function organized by the Riyadh Chamber of Commerce and Industry to mark Eid Al-Fitr.

"The Argentine crisis has been looming large for quite sometime as the country’s economy was in tatters and the authorities were trying to put things straight with retrenchment programs," Al-Assaf said. The developments in Argentina have not taken international markets by surprise, he added.

Speaking about the Kingdom’s new budget, the minister pointed out that the budget projections are generally made with a certain amount of caution.

Efforts are also made to streamline expenditure in the light of the global economic climate.

The minister disclosed that 20 percent of the budget deficit forecast for next year would be met by local banks, while establishments outside the banking sector are expected to contribute toward the rest.

"Saudi financial establishments and national reserves are capable of meeting the shortfall. We will not resort to foreign borrowing to meet the deficit. The position of our banks is excellent," Assaf had said after the Cabinet approved the 2002 budget. Revenues were projected at SR157 billion and expenditures at SR202 billion.

Assaf estimated that internal debt at the end of 2001 topped SR630 billion, just under the Kingdom’s Gross Domestic Product (GDP) of SR668 billion. The debt, obtained from local Saudi banks and financial institutions, is tipped to rise next year as the deficit increases.

Assaf had also said that the government was very careful to avoid burdening Saudi citizens through the new budget, but he acknowledged that some developmental projects will be delayed.

The minister expressed satisfaction over the private sector’s growth rate of six percent in real terms under the current hard economic conditions globally.

The government will continue to support the private sector, particularly the industrial sector which is heading in the right direction, the minister said.

Al-Assaf predicted a SR10 billion deficit in the current budget mainly due to international developments including a decline in oil prices.

The finance minister said his ministry did not owe arrears to any particular establishment in the Kingdom. However, he attributed the delay in clearing the outstanding payments to some establishments to legal disputes. Attempts are currently being made to resolve these disputes, which stand in the way of payments.

Muhammad Abdullah Al-Sheikh, a Saudi columnist, stressed the increased need for transparency in economic matters. Commenting on the minister’s statement that there was no dues outstanding against any establishment, Al-Sheikh called for more explanations as some companies and individuals in the private sector complain about delays in the payment of government bills.

The ministry is currently pursuing a dispute with 11 Korean companies, which had contracts in the country in the past, over payment of tax dues running into SR64 million. The arrears in some cases are for periods as far back as 1978.

According to a source, the Finance Ministry wrote to the Ministry of Commerce about the arrears of these companies.